As Per Section 175 of Income Tax Ordinance 2001

The text you’ve provided is a legal provision that gives authorities the power to enter and search premises in order to enforce tax-related regulations, conduct audits, and gather information for taxation purposes. The section grants various powers to the Commissioner (or an authorized officer) and specifies the rights and duties of the taxpayer or the occupier of the premises being accessed.

1. Powers of the Commissioner or Authorized Officer (Sub-section 1)

The Commissioner, or any officer authorized by the Commissioner in writing, has several powers to carry out their duties under this section:

• Access to Premises, Accounts, Documents, and Computers:

  • (a) The officer can enter and have free access (including real-time electronic access) to any premises, places, accounts, documents, or computers at all times without prior notice. This power enables the authorities to inspect and gather any information necessary for enforcing the tax laws.

• Copy or Extract Information:

  • (b) The officer can stamp, copy, or extract information from any accounts, documents, or computer-stored information they access. This allows them to gather relevant data from a taxpayer’s records.

• Impound Accounts/Documents:

  • (c) The officer can impound (seize) any accounts or documents and retain them for as long as needed for examination or for prosecution. This enables the authorities to hold on to critical documents while they investigate further.

• Seizing Computers for Data:

  • (d) If the required data is stored in a computer and not available in a hard copy or on a computer disk, the officer can impound the computer and retain it until the necessary information is copied or retrieved. This is critical for obtaining electronic records that might be necessary for tax assessments.

• Inventory of Articles:

  • (e) The officer may also make an inventory of any articles found at the premises. This ensures that items taken are properly listed and accounted for, maintaining transparency.

2. Authority for Expert or Valuer (Sub-section 2)

• The Commissioner can authorize an expert or valuer to enter any premises to perform tasks as assigned by the Commissioner. These tasks could involve tasks such as inspecting accounts or valuing assets for tax purposes.

3. Duty of the Occupier (Sub-section 3)

• The occupier of the premises (which could be the owner, manager, or another responsible person) is required to provide all reasonable facilities and assistance for the officers to effectively exercise their right of access. This provision ensures that the authorities can carry out their duties without obstruction.

4. Impounded Items: Responsibility and Access (Sub-sections 4 and 5)

• Sub-section 4: Any accounts, documents, or computers that are impounded by the Commissioner must be signed for by the Commissioner or an authorized officer, providing an official record of the seizure.

• Sub-section 5: A person whose items have been impounded can examine them and make copies or extracts during regular office hours. However, this must be done under the supervision of the Commissioner or a designated officer. This provision ensures the taxpayer has access to their own documents while allowing the authorities to maintain control over them.

5. Loss or Destruction of Impounded Items (Sub-section 6)

• If any accounts, documents, or computers are lost or destroyed while in the possession of the Commissioner, the Commissioner is required to provide reasonable compensation to the owner of those items. This protects the taxpayer’s interests in case of any loss or damage to their property during the inspection process.

6. Overrides Legal Privileges (Sub-section 7)

• This section takes precedence over other legal rules or privileges that may normally prevent access to premises or the production of certain documents. This means that, regardless of other laws (such as privacy laws or attorney-client privilege), the tax authorities have the right to access information that may be relevant for tax purposes.

7. Definition of Occupier (Sub-section 8)

• In this section, the term “occupier” refers to the owner, manager, or any responsible person who controls or occupies the premises or place being accessed. This ensures that the person with authority over the premises is accountable for facilitating access.

8. Rules for Electronic Real-Time Access (Sub-section 9)

• Sub-section 9 allows the Board (likely the taxation authority) to create rules regarding electronic real-time access for the purposes of conducting audits or surveys of persons liable to tax. This provision is particularly relevant in the context of digital records and audits, as electronic systems become more prevalent.

Implications and Purpose of This Section:

1. Tax Enforcement and Compliance:

   • This section grants authorities broad powers to ensure compliance with tax laws. The ability to enter premises, inspect documents, and seize computers allows the tax authorities to effectively audit taxpayers and investigate tax evasion or underreporting of income.

2. Facilitating Investigations:

   • The provision to impound documents and computers ensures that relevant information is secured during an investigation. It also allows authorities to prevent destruction or concealment of records that might be critical for tax assessments or legal proceedings.

3. Taxpayer Assistance:

   • Although the authorities have wide-reaching powers, the law also acknowledges the rights of the taxpayer by allowing them access to their impounded documents under supervision, and providing compensation if documents are lost or destroyed.

4. Technological Adaptation:

   • The inclusion of electronic real-time access reflects the shift towards digital records and the increasing importance of electronic systems in tax audits and surveys. It allows tax authorities to quickly access and analyze digital information, improving efficiency and reducing the opportunity for evasion.

Conclusion:

This provision empowers tax authorities with the necessary tools to ensure that taxpayers are compliant with the law, facilitates investigations into potential tax evasion, and allows for the seizure of critical documents and electronic data. However, it also provides protections for taxpayers by allowing them access to impounded materials and ensuring compensation in case of loss or damage. The section balances the need for strict enforcement with safeguards for fairnes